Intellectual Capital and Investment Efficiency: A Reflection from Listed Firms in Nairobi Securities Exchange, Kenya
Main Article Content
Keywords
Nairobi securities exchange, intellectual capital, investment efficiency, structural capital, relational capital
Abstract
Company’s investment in the developing countries remains below the pre-crisis level and in Kenya there has been an alarming increase of investment inefficiencies. Most firms in emerging economies including Kenya have displayed declining stock returns over time which is a challenge to investors. Thus, to fill this knowledge gap, the study sough to establish the effect of intellectual capital on investment efficiency of listed firms in Nairobi Securities Exchange (NSE). The study was anchored on Agency, Stewardship and Earnings Management theories. Both explanatory and longitudinal research design was adopted in the study. Explanatory research best explains the cause effect relationship between the study variables while longitudinal is ideal for a study covers a period of 10 years. The study targeted 30 listed firms from 2016 to 2023. Inclusion exclusion criteria were utilized to consider those firms that have been consistent with compete data during the study period. Random effect regression analysis results indicated that human capital (β1 = .190, ρ<.05), structural capital (β2 = .868, ρ<.05), and relational capital (β3 = .552, ρ<.05) had a positive and significant effect on investment efficiency of selected listed firms. The study concludes that human capital, structural capital and relational capital are key predictors of investment efficiency. The results validate the propositions of stewardship, agency, and earnings management theories. The study recommends that firms need to invest in human resource and talent development, focus on optimizing operational frameworks, build and maintain strong relationship and collaborations with stakeholders as a strategic initiative to promote investment efficiency.
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Scholar Chemutai, Department of Accounting & Finance, School of Business and Economics, Moi University, P.O. Box 3900, Kesses, Eldoret, Kenya
Department of Accounting & Finance, School of Business and Economics, Moi University, Kenya
Japhet Kogei, Department of Accounting & Finance, School of Business and Economics, Moi University, P.O. Box 3900, Kesses, Eldoret, Kenya
Department of Accounting & Finance, School of Business and Economics, Moi University, Kenya